"And governments need to finance debt"

Chris, sovereign governments do not need to finance debt nor indeed take on any debt at all in order to spend whatever they please in their own currency.

The constraints in place are voluntary and political - they are not in any way economic or financial.

The biggest problem I see is an already debt saturated private sector reaching the point of being unable to continue to drive growth through endless debt expansion and sovereign governments, because of political and ideological pressures being unwilling to do what is necessary - keep running deficits - in order to facilitiate growth.

Where Asia's economies have the advantage over ours is that most of them have no welfare system in place. Since their fiscal expenditure is consequently far less, they tax less. Thus, with increased disposable income, savings rates are high and the extra consumer spending drives growth.

Chris, fozz & benny tea, i am afraid that you all may be correct. Krudd the dud's stimulus packages have probably only delayed the inevitable, while simultaneously increasing both public and private debt.

The last time we had a recession after the stock market crash in 1987, our economy lagged, a long way behind the rest of the world on the way down. The party continued for us, through bicentenary/expo '88 and did not grind to a halt until about 89/90 a good 2 years behind every other economy in the world.

Sometimes the sheeple are too optimistic for their own good.

The real purpose of the stimulus package is to put the local economy on some sort of "life support" and buy time in the hope that somebody will find an overall cure and maintaining optimism is a vital component.

As much as many are opposed to it, do have done nothing would have been rather worse.

If you think that the Liberals would have done anything different, (except maybe giving further tax breaks to the higher income earners) you're deluding yourself.

In reality the current system is so flakey it can't be fixed and should be replaced but I'm afraid we're stuck with it.

Remember when the asian so called Tiger economies all collapsed. We were expected to go into terminal decline.

It didn't happen. The libs held their nerve, or at least their leader did, & we came out of it scott free, even stronger, & smelling like daises.

Well this time we had a wimp, who was the first to blink, with his spending party.

I don't know if it has bought any time, I doubt we needed to buy any, but it sure has bought a lot of sh#t. Sh#t we will still be paying for when we change government, again.

I wonder if we will have leader then, who doesn't blink, or another wimp, like the current leader of the libs.

Pretty much of a pair, aren't they, & to think we could have had old Bommer Beasley, a much more likely bloke than either of these two.

Hasbeen,

Great confusion arises when we equate a sovereign government budget with a household budget. They are not remotely the same thing. We all must finance our spending by earning or borrowing (or stealing!). Our federal government does not. Borrowing while running a deficit serves mostly as a tool for maintaining interest rates. They do not need to levvy taxes or borrow money in order to spend it.

If EVERYBODY has to earn or borrow Australian currency before they are able to spend Australian currency - then where did it come from? What is the source?

If you check modern history, you will see that for 3 decades, our government was almost permanently in deficit. Are today's generations still paying for this spending? You will also note that this same period was the most prosperous in our history, with unemployment averaging around 2.5% (compared to 7.6% in the period we are in now) and nation building going ahead in leaps and bounds.

The hue and cry that our children will be burdened with debt because of the current deficit is complete nonsense and serves only to confuse and mislead.